Samsung

FTC chief urges Samsung to restore control tower

PUBLISHED :May 14, 2018 - 15:39

UPDATED :May 15, 2018 - 10:08

[THE INVESTOR] Kim Sang-jo, head of the nation’s antitrust watchdog who used to criticize Samsung Group for operating a powerful control tower office to oversee the group’s dozens of affiliates without any stake in them, is now urging Samsung to restore the defunct office.

“Samsung Electronics Vice Chairman Lee Jae-yong needs to set up a new control tower different from the former Future Strategy Office,” he said in an interview with a local media on May 14. “If the control tower makes a tentative decision to be finalized by each affiliate, the group could build a more transparent decision-making structure without transferring into a holding unit system.”

Samsung dismantled the Future Strategy Office last year amid the snowballing corruption scandal surrounding former President Park Geun-hye and the nation’s big firms. The office was suspected of playing a role in providing funding to shady foundations run by Park’s close confidante.

Since then, the group’s three key units -- Samsung Electronics, Samsung C&T and Samsung Life Insurance -- have operated their own decision-making teams.

Kim’s latest comments are causing confusion among industry watchers here. Even though he stressed a “new” control tower, there seems to be no difference with the previous one. The Future Strategy Office used to sets the direction of long-term investments or bigger synergies among affiliates. Even then, its decision was required to get approval from the board of each affiliate to be finalized.

“The FTC chief is overstepping. The government’s excessive interference could interrupt operations of private companies and undermine their competitiveness especially when they go global,” an industry source said on condition of anonymity.

Kim who is nicknamed “Chaebol Sniper” is more recently upping pressure on Samsung, the nation’s largest conglomerate, as he is leading the government’s chaebol reform drive. At a meeting with business leaders last week, he urged the Samsung heir to play a bigger role in speeding up the group’s governance reforms.

“There may be several ways (for reforms at Samsung) but the government cannot and should not enforce a specific way. However, one thing clear is that the current way is not sustainable,” he told reporters, upping pressure on the Samsung heir.

“A belated decision will cause huge costs both for Samsung and the entire Korean economy. The worst decision is spending time without making any decision.”